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Cryptocurrencies crash… But they’ll be back

Bitcoin (BTC) may never have a stable price

The debate continues to rage about whether Bitcoin’s price naturally goes up for ever or goes down to zero. As I listen to it, I sometimes wonder what it is about each argument the other side is failing to grasp. I’ll explain. There is no fundamental value holding the price of Bitcoin up, hence nothing prevents if from falling to any arbitrary low you care to name. True. There is no fundamental value holding the price of Bitcoin down, so nothing prevents it from rising to any arbitrary high.

Ah, but any investor who follows fundamentals can easily jump in here and point out that this is an old story, going back, at the very least, to the story of the famous Dutch tulip bulb market bubble. A speculative bubble lasts for some arbitrary period of time, but once the price falls to zero and all the bulbs are planted, the issue is over, done, and resolved. Very true—of tulip bulbs, not of cryptocurrencies. A great deal turns on this small hinge, so let’s drill down a bit. 

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.